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German law Renewable Energy

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German Laws

German Laws

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  • 1. The German Renewable Energy Act – 2009Chances & Risks under the Scope of an European Front-RunnerDr. Marius BoeweCounsel+49 221 5771 233mboewe@mayerbrown.comMayer Brown LLP is a limited liability partnership established under the laws of the State of Illinois, U.S.A.Mayer Brown LLP ist eine Partnerschaft mit beschränkter Haftung nach dem Recht des Staates Illinois, U.S.A.
  • 2. Overview• Introduction and background information• History of current Renewable Energy Act (EEG)• Operation mode of EEG – Energy sources – Feed-in tariffs – Burden sharing• Case study 2
  • 3. Background Information Shares of renewable energy sources among total final energy consumption in Germany 2009 Hydropower 0.8 % Wind energy 1.6 % RES share 2009 10.1 % Biomass 2) Other fossil energy 7.0 % resources (e.g. hard coal, lignite, mineral oil, natural gas) and nuclear energy 89.9 % Other renewables 0.7 % ) RES - Renewable Energy Sources; solid, liquid, gaseous biomass, biogenic share of waste, landfill and sewage gas; Deviations in the totals are due to rounding;Source: BMU-KI III 1 based on Working Group on Renewable Energies-Statistics (AGEE-Stat) and the Centre for Solar Energy and Hydrogen Research Baden-Württemberg(ZSW), according to Working Group on Energy Balances (AGEB); all figures provisional 3
  • 4. Background Information Structure of final energy supply from renewable energy sources in Germany 2009 Total: 237.8 TWh Biogenic solid fuels, heat 42.4 % Biofuels 14.2 % Geothermal energy , 2.1 % Hydropower 8.0 % Solar thermal energy 2.0 % Wind energy Photovoltaics Biogenic fuels, 15.9 % 2.6 % electricity 12.8 % Biomass (total)*, including biofuels: 69 % * Solid, liquid, gaseous biomass, biogenic share of waste, landfill and sewage gas; Source: BMU-KI III 1 according to Working Group on Renewable Energies-Statistics (AGEE-Stat); all figures provisional 4
  • 5. Background Information Development of electricity generation from renewable energy sources in Germany 1990 - 2009 120,000 Hydropower Wind energy EEG: Biomass * Photovoltaics 100,000 January 2009Electricity generation [GWh] EEG: August 2004 EEG: 80,000 April 2000 Amendment to BauGB: 60,000 November 1997 40,000 StrEG: January 1991 - March 2000 20,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 * Solid, liquid, gaseous biomass, biogenic share of waste, landfill and sewage gas; Electricity from geothermal energy is not presented due to the negligible quantities of electricity produced; StrEG: Act on the Sale of Electricity to the Grid; BauGB: Construction Code; EEG: Renewable Energy Sources Act; Source: BMU-KI III 1 according to Working Group on Renewable Energies-Statistics (AGEE-Stat); Image: BMU / Christoph Edelhoff; all figures provisional 5
  • 6. European Background• Dec.2008: Political agreement on the Renewables Directive• 11.-12. Dec. 2008: EU summit agrees final version of the Renewables Directive (2009/28/EG)• 30. June 2009: EU issues template for National Renewable Energy Action Plans (NREAPs)• 30. June 2010: Deadline for EU states to present National Renewable Energy Action Plans• 2020: Target date for EU objective of sourcing 20% of energy from renewable sources 6
  • 7. Europeanwide Comparison of Shares inRenewable Energies by Member States 7
  • 8. History of Current Act• 1991: Renewable Energy Input Statute (StromeinspeisungsG) – First steps to guarantee feed-in of renewable energy producers – First legally guaranteed feed-in tariffs – Only profitable for wind power• 2000: Renewable Energy Act 2000 – Increasing the scope of reneweable energy sources – Raising the feed-in tariffs• 2004: Renewable Energy Act 2004; and• 2009: Renewable Energy Act 2009 – Adjustments on tariffs, periods of sponsorship and degressions – 1 sec. 2 EEG 2009: by 2020 share of renewable energy sources shall at least amount to 30 percent 8
  • 9. Operating Mode of EEG Operator of Legally guaranteed feed-in reneweable energy of entire produced power production plant, into power grid and legally e.g., windmill guaranteed feed-in tariff for 20 years to be paid by grid- operator Power grid „feed-in tariff " to be paid by end consumer as renewable energy contribution End consumer 9
  • 10. Renewable Energy SourcesSec. 3 No. 3 EEG• Hydropower (including wave power)• Tidal power• Salt gradient and flow energy• Wind energy• Solar radiation• Geothermal energy• Energy from biomass (incl. biogas)• Landfill gas and sewage treatment gas• Biodegradable fraction of waste 10
  • 11. Feed-In Tariffs Feed-in tariffs depend on: – Renewable energy sources – Year of commissioning – Capacity of power plant – Degression 11
  • 12. Examples of Feed-In Tariffs • Hydropower: Capacity up to 500kW 500kW-2MW 2MW-5MW 12.67 8.65 ct/kWh 7.65 ct/kWh ct/kWh • No degression; no difference in year of commissioning 12
  • 13. Examples of Feed-In Tariffs• Offshore wind energy: – Degression rate until 2014: 0.0 %; from 2015: 5%; duration of tariff payment: 20 years Initial tariff in ct/kWh Early bird bonus Basic for first 12 years during initial tariff tariff in period ct/kWh 2009 13 2 3.5 2010 13 2 3.5 2011 13 2 3.5 2012 13 2 3.5 2013 13 2 3.5 2014 13 2 3.5 2015 12.35 1.90 3.33 2016 11.73 0.0 3.16 2017 11.15 0.0 3.00 2018 10.59 0.0 2.85 13
  • 14. Burden Sharing under the EEG• Grid operator is obliged to – Accept entire amount of renewable energy – Pay legally guaranteed feed-in tariff – Sell renewable energy at spot market• Grid operator is allowed to – Pass through difference between paid feed-in tariff and earned profit to end consumer („renewable energy contribution“) 14
  • 15. Requirement for Compensation Mechanism forPractical Reasons 15
  • 16. Consequence: Equalisation Scheme Operator of RE plant Energy Tariff Local grid operator Energy Tariff Transmission grid operator Selling RE at spot market Equalisation amongst transmission system operator Nationwide equalized RE contribution Energy provider Energy price, including RE contribution Energy (currently 2,047 ct/kWh) End consumer 16
  • 17. Case Study• Client runs biomass plant, revenue has been calculated on basis of EEG, which defines all relevant figures for 20 years. – Basic tariff + energy crops bonus (for using plants/parts of plants from agricultural operations, have not been treated or modified in any way)• Calculated investment : 4.72 Mio €• Calculated earnings by selling EEG-power: 1.275 Mio € (p.a.) 17
  • 18. Case StudyBiomass plant originally used saw mill as energy source• Issue: saw mill waste ≠ energy crop• Client reaction: import of silvicultural waste from Netherlands• Problem: very high proportion of soil/sand soil/sand outweighs wood 4-5 times• Consequences: - as waste is delivered on m³ basis and paid by weight, client paid for 450 kg/m³ instead of 400 kg/m³  12 % higher costs  more waste required - sand melts in plant and slags mechanism Further consequence: • maintenance must be conducted 4 times a year (instead of 1 time) • each maintenance lasts 1 week (additional costs) • missing feed-in tariffs 100,000 € (p.a.) 18
  • 19. Case Study• Client reaction: change of supplier• Problem: new supplier (inter alia) contaminated wood (tar, plumb , etc. )• Consequences: -Client loses energy crops bonus (225,000 € p.a.) -Client loses guarantee and warranty of plant for using improper fuel (sand, tar, etc. ) -Client violates various laws and was fined for: -Unlawful operation of plant -Unlawful combustion of contaminate waste (tar)  Actual Investment: 5.30 Mio € (+580 t € difference)  Actual EEG-earnings: 0.855 Mio € (-420 t € difference) 19
  • 20. Contact Dr. Marius Boewe Counsel, Cologne T.: +49 221 5771 233 E.: mboewe@mayerbrown.com 20

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